Morgan Stanley’s Wilson says the stock correction is in its final innings

Mike Wilson, Morgan Stanley’s chief investment officer and chief US equity strategist, said the market is in the final innings of its correction⁵. He said the correction in the average American stock is nearly over². He made the case on a television appearance in which he discussed the latest market trends and the state of the AI trade⁵.

Wilson set a target that would put the S&P 500 at 8,300 by May 2027³. He expects high-quality companies to remain comparatively resilient⁴. His team discussed on Monday its financial conditions index, a compilation that includes interest rates¹. The call is a claim that the broad market, not only its leaders, is close to a turning point².

Why it matters to investors

Wilson’s call lands on a day of mixed signals. US stock futures slipped as Nasdaq 100 futures fell, while Dow Jones futures rose⁴. The argument he is making is about breadth: his comments concern the average stock, not only the largest index members².

The financial conditions index matters because it links the correction to monetary policy. A market commentary built on that index argued that the market’s squeal is music to the Federal Reserve’s ears, but still too faint¹. That framing puts Wilson’s bullish target and the Fed’s inflation fight side by side: market stress is welcome to the central bank, while Wilson argues that most of the damage to the average stock has already been done^1,2.

The split between Nasdaq and Dow futures on the day he spoke shows the market had not yet settled on that view⁴. His preference for quality companies is a call on which stocks lead if he is right⁴. It implies that balance sheets and earnings durability, rather than exposure to the AI trade alone, would separate winners from laggards in a recovery he describes as close^4,5.

What to watch

The path to 8,300 by May 2027 runs through financial conditions, which Wilson’s team tracks with its own index^1,3. The next readings of that index will test the claim that the correction is close to its end^1,5.

Investors will also watch the split between Nasdaq and Dow futures, which captures the gap between technology and the rest of the market that Wilson’s breadth argument rests on^2,4. If quality companies outperform, that would support his view⁴. If the average stock keeps falling, the final-innings call would be in question².